On January 1, 2021, Entity A granted a franchise to Entity B involving a food stall. The franchise agreement requires Entity B to pay nonrefundable initial franchise fee amounting to P1,000,000 within ten days from the signing of document evidencing the franchise agreement. Moreover, the franchise agreement requires Entity B to pay contingent franchise fee equivalent to 10% of its sales revenue to Entity A. Entity B paid the initial franchise fee on January 10, 2021. In relation to initial franchise fee, Entity A is required to render the following separate and distinct performance obligations: a. To construct the food stall of Entity B which has stand-alone selling price of P500,000. b. To allow Entity B to use its registered trademark and tradename for a period of 20 years starting January 1, 2021 which has stand-alone selling price of P200,000. c. To supply 5,000 units of raw materials to Entity B which has stand-alone selling price of P300,000. On June 30, 2021, Entity A completed the construction of Entity B's food stall. As of December 31, 2021, Entity has already delivered 2.000 units of raw materials to Entity B. Entity B commenced its operations

On January 1, 2021, Entity A granted a franchise to Entity B involving a food stall. The franchise agreement requires Entity B to pay nonrefundable initial franchise fee amounting to P1,000,000 within ten days from the signing of document evidencing the franchise agreement. Moreover, the franchise agreement requires Entity B to pay contingent franchise fee equivalent to 10% of its sales revenue to Entity A. Entity B paid the initial franchise fee on January 10, 2021. In relation to initial franchise fee, Entity A is required to render the following separate and distinct performance obligations: a. To construct the food stall of Entity B which has stand-alone selling price of P500,000. b. To allow Entity B to use its registered trademark and tradename for a period of 20 years starting January 1, 2021 which has stand-alone selling price of P200,000. c. To supply 5,000 units of raw materials to Entity B which has stand-alone selling price of P300,000. On June 30, 2021, Entity A completed the construction of Entity B's food stall. As of December 31, 2021, Entity has already delivered 2.000 units of raw materials to Entity B. Entity B commenced its operations

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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